INTEGRATOR INSIDER

Jul 27, 1995

BM goes on the offensive. Big Blue launched a preemptive strike, protesting the Air Force's proposed method of evaluating bids for the Air Force's workstation contract. The contract would give IBM a brand new contract vehicle -- perhaps the first, major one -- to get its latest PowerPC machines into the government market.

Competitors for the contract include Hewlett-Packard Co. and Electronic Data Systems.

All of a sudden, federal outsourcing doesn't sound so bad. For years, federal agencies let contractors maintain their facilities, thus the term facilities management. But with unrelenting pressure from Congress to reduce overhead costs, agencies have stopped turning a deaf ear to the once-blasphemous term of outsourcing.

In fact, the Defense Information Systems Agency said it will let a contractor manage three of the Pentagon's key data processing centers. Even state governments have started outsourcing the mundane task of maintaining mainframe applications. Two even have outsourced certain infotech operations overseas.

Computer Sciences Corp., one of the leaders in the commercial outsourcing market, last month formed a federal outsourcing group. The company picked Bill Russell, the brains behind the 1994 $1.6 billion contract win from British Aerospace, to lead CSC's foray into the federal market.

Mike Dawkins of IBM's commercial outsourcing arm, Integrated Systems Solutions Corp., pointed out that the federal government can't keep saying no to outsourcing. "The arguments for outsourcing are too compelling," he said.

Things can't seem to go wrong for BDM. The McLean, Va., company's second quarter showed sharp increases in revenue, net income and earnings per share -- all this after it had completed its initial public offering of 2.9 million shares of common stock, generating $53.2 million.

Revenues totaled $213.1 million, up 22 percent from the same period in 1994. Net income grew 29 percent to $3.9 million, and earnings per share increased 46 percent from $0.26 to $0.38. The biggest winner in the second quarter was BDM Technologies, the company's commercial and state and local subsidiary. It posted a 64 percent revenue increase. That's good news for CEO Philip Odeen, who has been pushing hard to get the company to diversify its defense business base.

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